What to Look for in a Bond
5 basic rules when investing in bonds:
- Look for bonds first being issued, as the issuer pays the sales commissions on new issues.
- Look for high-quality bonds, rated in the “A” range by Standard & Poor’s or Moody’s Investor Services.
- Avoid bonds that have a higher chance of being called before the maturity date.
- Avoid selling your bond on the secondary market–aim to keep it until maturity.
- If you do plan to sell your bonds before they mature, select those with good resale opportunities, such as bonds issued by larger corporations and/or municipalities.
Source: The Wall Street Journal Lifetime Guide to Money